2018 (8) TMI 697 - AT - Service Tax

CENVAT Credit - RCC pipe RCC Main pillar HR Sheet Conical Manhole, Cement HRC sheet etc used in fabrication of Structural support - Held that - The issue is decided in favor of Maruti Suzuki Ltd. Vs. CCE, Delhi-III 2009 (8) TMI 14 - SUPREME COURT , where it was held that assessee is entitled to credit on the eligible inputs utilized in the generation of electricity to the extent to which they are using the produced electricity within their factory (for captive consumption) - credit allowed. Advertising agency services - The case of appellant is that since the appellant is not a advertising agency and has not rendered the advertisement agency service which otherwise has been rendered by M/s. Prime Site and M/s. Grphis Ads, neither he is the sub contractor of both the said companies as such appellant is not liable to pay the service tax on that account - Held that - The appellant contracted with both the advertising agency to arrange or prepare or design the advertisements for their clients to be approached by them but for said advertisement to be displayed by the appellant at the sites to be constructed by him under the agreement with the MCD in his favour. Thus those two companies are rather the sub contractors of the appellant - the appellant has taken the plea that those payments are made in lieu of renting the property to both the advertising agency companies to display the advertisements of their clients but the perusal of the invoice of appellant falsifies the said submission as those amounts are mentioned to have been received for displaying the advertisements - The argument of the appellant to that effect is, therefore not sustainable. Levy of the proportionate interest and the penalties - Held that - It is an apparent and admitted fact that the appellant has discharged his liability for the period 2007-2008 and 2010-11 qua the amount received for rendering the services of renting of immovable property but only after the issuance off the show cause notice to him that too without the payment of interest. From Section 75, of the Act payment of interest is a mandate in case there is delay in discharge of the tax liability. In view of said settled provision and the apparent and admitted delay on part of the appellant we hold that there is not infirmity in confirming the demand of the interest from the appellant - the proportionate penalties have been confirmed. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Wrong availment of cenvat credit on construction material.
2. Service tax liability for providing advertising agency services.

Analysis:

Issue 1: Wrong Availment of Cenvat Credit on Construction Material
The Department alleged that the appellant wrongly availed cenvat credit on construction material used for various structures under agreements with government authorities. The Commissioner Appeals dropped this demand, which was not challenged by the Department, hence final. The Tribunal confirmed this decision, citing the Maruti Suzuki case, supporting the appellant's right to cenvat credit.

Issue 2: Service Tax Liability for Providing Advertising Agency Services
The Department claimed the appellant was liable for service tax as a sub-contractor for advertising agency services. However, the Tribunal found the appellant was not a sub-contractor but the main service provider. The appellant contracted with advertising agencies to prepare advertisements for display on structures constructed under government agreements. The Tribunal clarified that the appellant, as the main service provider, was liable for service tax on payments received from the advertising agencies for displaying advertisements, regardless of whether the advertising agencies had already paid service tax on preparing the advertisements.

The Tribunal rejected the appellant's argument that the payments were for renting property, as invoices indicated payment for displaying advertisements. The Tribunal upheld the demand for service tax, even without considering a specific circular. The Tribunal also confirmed the imposition of interest and penalties due to the appellant's delayed payment of tax liability, citing relevant sections of the Act. The Tribunal found the appellant's actions amounted to suppression of facts and evasion of tax, as supported by certificates from the advertising agencies and clients. The Tribunal upheld the penalties, except for modifying the decision regarding the appellant's classification as a sub-contractor.

In conclusion, the Tribunal upheld the findings of the impugned order, rejecting the appeal and confirming the demand for service tax, interest, and penalties, except for the appellant's classification as a sub-contractor.

Judgement:
The Tribunal pronounced the decision on 02.08.2018, with Mr. C.L. Mahar and Ms. Rachna Gupta as members. The appellant was represented by Mr. Anil Kumar Khanna, while Mr. G.R. Singh represented the respondent. The Tribunal's detailed analysis addressed the issues of cenvat credit and service tax liability, ultimately upholding the demand for service tax, interest, and penalties, except for the appellant's classification as a sub-contractor.